An accounting report that shows the changes in capital during the accounting period is:
a.) a balance sheet.
b.) an income statement.
c.) a statement of owner's equity.
d.) All of these answers are correct.
The Balance sheet does not normally show changes in capital during the period unless you have two years shown, and then only the gross value of the change is shown not the individual components of the change.
The Income Statement shows only items of income and expense and the difference between the two. It may show changes in capital but only if the title includes the caption "and changes in retained earnings" b;ut again only the changes in retained earning are shown, not all changes in equity.
Therefore the Statement of Owner's equity is the only statement which reconciles the beginning balance of owner's equity with the ending balance for the period then ended. It shows all catagories of changes in equity.
All of the above
d.) All of these answers are correct.
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c.) a statement of owner's equity.
The correct answer is c) a statement of owner's equity.
To understand why, let's break down the options:
a) A balance sheet provides a snapshot of a company's financial position at a specific point in time. It shows the company's assets, liabilities, and owner's equity. However, it does not specifically focus on changes in capital during the accounting period.
b) An income statement, also known as a profit and loss statement, shows a company's revenues, expenses, and net income or loss for a specific period. While it gives an overview of a company's financial performance, it does not specifically address changes in capital.
c) A statement of owner's equity, also known as a statement of changes in equity or statement of retained earnings, focuses on the changes in a company's capital during a given accounting period. It presents the beginning balance of owner's equity, any additional investments made by the owner, net income or loss, and any withdrawals or distributions to the owner. This statement helps track the changes in capital and provides a link between the income statement and balance sheet.
d) The correct answer, as mentioned before, is c) a statement of owner's equity. So, only option c) is the correct answer that specifically reflects the changes in capital during the accounting period.